Iran vows ‘devastating’ response as US threatens toughest ever economic hit

Iranian Parliament Speaker Mohammad Bagher Ghalibaf calls planned US sanctions against Iran as “unjust”.

Listen Summarise Iran vows a “devastating” military response to new US threats to bring down its leadership through economic sanctions. The US plans to impose the toughest economic sanctions ever to bring down Iran’s regime. China urges political solutions and criticises sanctions, while US pressure intensifies amid rising oil prices and geopolitical tensions in the Strait of Hormuz. AI generated

DUBAI – Iran said on Aug 21 its response to any new US threats would be “devastating” after Washington pledged to impose the toughest financial penalties in history with the aim of toppling the Iranian leadership.

US Treasury Secretary Scott Bessent’s comments on Aug 20 followed a warning from President Donald Trump of economic consequences against any country that provided “any type of lifeline to Iran”. Bessent promised details on Aug 24.

The chief of staff of Iran’s armed forces, Major-General Ali Abdollahi, said Tehran’s reaction would be broad and decisive.

“With preparedness across land, sea, air, air defence and cyberspace, Iran’s armed forces will respond to the enemy’s new threats with crushing, punishing and devastating responses,” Abdollahi was quoted as saying by Iranian media.

Iran’s powerful Parliament Speaker Mohammad Bagher Ghalibaf, the main negotiator in mediated negotiations with the United States, said Washington appeared to have concluded it could not prevail in its direct military confrontation.

“We must make plans to deal with the unjust sanctions so that we can overcome them,” he said during a visit to neighbouring Iraq, accusing the US and Israel of resorting to what he said was economic and “cognitive” warfare.

Iranian President Masoud Pezeshkian said, meanwhile, it is time to end the months-long war with the US because Tehran appears to be in a stronger position than Washington.

“It is better that we bring the war to an end now as we are in a position of power and dignity,” Pezeshkian said in a meeting with doctors.

“The whole world acknowledges our victory and emphasises that America has attacked our schools, hospitals and infrastructure in violation of all regulations and is hated around the world.”

Pezeshkian also defended a memorandum of understanding agreed with the US in June aimed at ending the war, claiming it did not signal a defeat for Tehran. “They cannot find even a single clause in this agreement that indicates capitulation. All the commitments concern the other side,” he said.

Oil prices steadied on Aug 21 but were on track for a second weekly rise on concern over Gulf energy exports.

Oil hit a more than three-week high on Aug 20 after the sanctions threat, intended to force Iran to agree to an end to a conflict that has stranded millions of barrels of Middle Eastern oil.

“I’m not sure why oil has popped up on this,” Bessent told CNBC. “If we are doing the maximum economic pressure , then that means that likely there will not be a large-scale kinetic restart,” he said, using a term referring to military force.

Just seven commodity ships sailed along the Strait of Hormuz on Aug 20, half the previous day’s tally, data from shiptracker Kpler showed, compared with more than 130 a day before the war.

Thousands of people have been killed in the war, which drew in Gulf nations and shocked markets as Iran flexed its ability to curb shipping through the Strait of Hormuz, a waterway that carried about a fifth of all traded oil before February.

The US and Iran have twice announced ceasefire deals, in April and June, aiming to restore the free flow of shipping through Hormuz on a path towards ending the nearly six-month-old conflict, but both quickly crumbled.

Iran has weathered near-continuous, punishing economic sanctions for nearly 50 years, since 1979’s Islamic Revolution.

Before Bessent spoke, Iran’s Foreign Ministry said it condemned US economic and trade sanctions, calling them “economic terrorism” that would not “create even the slightest hesitation in Iranians’ determination to safeguard Iran’s independence, dignity and national sovereignty”.

Bessent told CNBC he would share more details on the latest package and “talk about exactly what we’re going to do” on Iran at a news conference on Aug 24.

“We are going to collapse this regime. It is time for our allies and the rest of the world to make a decision,” he said, describing a naval blockade reimposed on Iran in July and the “toughest sanctions in history” as a “one-two punch”.

Trump is under pressure at home to end the war , with high fuel prices dragging down his approval ratings and potentially threatening his Republican Party’s control of Congress in midterm elections in November.

Offers of Iranian crude to Chinese buyers have already declined since the US reimposed its blockade on Iranian ports in mid-July, trade sources told Reuters.

China buys more than 80 per cent of Iran’s shipped oil, according to 2025 data from Kpler, but further US economic warfare with Beijing, which has eased earlier restrictions on exports of its vital rare-earth minerals, risks retaliation.

When asked if the US could target China for doing business with Iran, Bessent said many conversations were best to have in private.

“Keep in mind that the Chinese get 50 per cent (of their) energy from the Gulf. So it would do them a big service to get with the programme,” he said.

China’s embassy in Washington said “sanctions and pressure do not help resolve the problem”, calling for diplomatic means.

Tightening sanctions entails other risks, especially to US allies in the Gulf, whose energy facilities and desalination plants they depend on for drinking water have come under Iranian attack. REUTERS